White House meets with finance CEOs over debt limit

Wednesday

WASHINGTON — Goldman Sachs Chief Executive Officer Lloyd Blankfein left a White House meeting and said lawmakers are risking the economic recovery if they don't raise the federal debt ceiling.

Blankfein was among a group of financial-industry executives including JPMorgan Chase & Co. CEO Jamie Dimon and Brian Moynihan, CEO of Bank of America, who met with President Obama on Wednesday, the second day of a partial government shutdown. Democrats and Republicans are deadlocked on spending legislation and already are battling over raising the U.S. debt limit, which is required by later this month to avoid a default.

"There's a consensus that we shouldn't do anything that hurts this recovery," Blankfein said as he left the White House. "They shouldn't use the threat of causing the U.S. to fail on its obligations to repay its debt as a cudgel."

The meeting, set up by the Financial Services Forum, a Washington-based trade group representing CEOs for the largest Wall Street banks, was part of an effort by the Obama administration to leverage the business community's clout in breaking the stalemate. Administration officials said pressure from the business community was effective in past fiscal fights.

"The financial community is in an excellent position to educate the public about the consequences to every-day folks in the event we default," said Valerie Jarrett, a senior adviser to the president.

The group met earlier with the No. 2 and No. 3 House Republicans, Majority Leader Eric Cantor of Virginia and Kevin McCarthy of California.

Blankfein said the executives were "apolitical" and not taking sides on the underlying political issues, including Republican demands that the president's health-care law be stripped of funding or delayed as the price of a deal.

Those arguments, he said, shouldn't be connected to taking action to make sure the government can pay its bills.

"There's precedent for a government shutdown; there's no precedent for default," he said. "We really haven't seen this before and I'm not anxious to be part of the process to witness this."

Moynihan said the goal of the executives was to make sure "people understand the seriousness of the situation."

Even as the government remains shut down, raising the government's $16.7 trillion debt limit has become the focal point for White House officials and the business community.

Treasury Secretary Jacob Lew reiterated in a letter to lawmakers on Tuesday that the U.S. will hit the debt ceiling no later than Oct. 17 and urged them to increase the nation's borrowing authority "immediately."

As he arrived at the White House, Dimon said he hoped an agreement will be reached before the debt-ceiling deadline.

"We just want solutions," Dimon said. "I think if people do the right things, America can grow aggressively and grow rapidly. That's what we should be looking for."

Gene Sperling, the director of Obama's National Economic Council, said Tuesday there was a "false sense of complacency among some in the market that somehow things will always be solved at midnight."

Market participants need to realize that "unless sensible people in the Republican Party are willing to take back control of their party, that there is a much more serious risk of a very negative economic and financial event," Sperling said at a Bloomberg luncheon in Washington.

The executives may have some financial clout with congressional Republicans. The securities and investment industry was a top source of campaign cash for House Republican leaders in the 2012 election cycle as they lobbied against new regulations.

The industry contributed $1.4 million to House Speaker John Boehner's campaign in the 2012 cycle compared with $180,600 in the 2008 elections, according to data compiled by the Washington-based Center for Responsive Politics, a nonprofit research group. Cantor received $908,900 from the industry compared with $222,000 in 2008.

Obama has had a sometimes rocky relationship with the industry. He has repeatedly blamed "reckless and irresponsible" risk-taking at financial institutions for precipitating the banking crisis triggered by the Sept. 15, 2008, bankruptcy filing by Lehman Brothers Holdings Inc.

In 2009, he criticized "fat-cat bankers" who continued receiving bonuses and were fighting his effort to impose tougher regulation on the industry.

The White House listed other meeting attendeees:

Robert Benmosche, CEO of the American International; Michael Corbat, CEO of Citigroup; Douglas Flint, chairman of HSBC Holdings; James Gorman, CEO of Morgan Stanley; Gerald Hassell, CEO Bank of New York Mellon; Jay Hooley, CEO of State Street; Anshu Jain, Co-CEO of Deutsche Bank; Abigail Johnson, president of Fidelity Investments; John Rogers, executive vice president of Goldman Sachs; Keith Sherin, CEO of General Electric Capital; John Stumpf, CEO of Wells Fargo & Co., and Rob Nichols, CEO of the Financial Services Forum.

_ With assistance from Mike Dorning and Julianna Goldman in Washington.